BMI Consent Decree Does Not Bar Fractional Licensing, Despite DOJ's Views

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U.S. v. BMI, No. 64-3787 (S.D.N.Y. Sep. 16, 2016) [Doc. 100].

Judge Stanton of the Southern District of New York holds that the BMI Consent Decree neither bars fractional licensing nor requires full-work licensing, contrary to the Justice Department's recent statement that the PROs are required to offer full-work licenses.  BMI brought its application for construction of its Consent Decree based upon 8/4/16 of the Justice Department's statement, and the Court held that nothing in the Consent Decree supports the Justice Department's view that full-work licensing is required.  The Consent Decree "does not address the possibilities that BMI might license performances of a composition without sufficient legal right to do so, or under a worthless or invalid copyright, or users might perform a music composition licensed by fewer than all of its creators."  Continuing, Judge Stanton stated "The Consent Decree does not regulate the elements of the right to perform compositions. Performance of a composition under an ineffective license may infringe an author's rights under copyright, contract or other law, but it does not infringe the Consent Decree, which does not extend to matters such as the invalidity or value of copyrights of any of the compositions in BMI's repertory"

ASCAP & BMI Consent Decrees Will Not Be Modified; DOJ Antitrust Div.

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Here is a copy of the Statement of the Department of Justice on the Closing of the Antitrust Division’s Review of the ASCAP and BMI Consent Decrees (Aug. 4, 2016).  In short:

... the consent decrees, which describe the PROs’ licenses as providing the ability to perform “works” or “compositions,” require ASCAP and BMI to offer full-work licenses. The Division reaches this determination based not only on the language of the consent decrees and its assessment of historical practices, but also because only full-work licensing can yield the substantial procompetitive benefits associated with blanket licenses that distinguish ASCAP’s and BMI’s activities from other agreements among competitors that present serious issues under the antitrust laws. Moreover, the Division has determined not to support modifying the consent decrees to allow ASCAP and BMI to offer “fractional” licenses that convey only rights to fractional shares and require additional licenses to perform works. Although stakeholders on all sides have raised some concerns with the status quo, the Division’s investigation confirmed that the current system has well served music creators and music users for decades and should remain intact. The Division’s confirmation that the consent decrees require full-work licensing is fully consistent with preserving the significant licensing and payment benefits that the PROs have provided music creators and music users for decades. 

First, the DOJ described the background of the consent decrees.  Thereafter, the DOJ found that there is broad consensus that ASCAP and BMI as currently constituted fill important and procompetitive roles in the music licensing industry; the consent decrees require full-work licensing; modification of the consent decrees to permit fractional licensing by ASCAP and BMI would not be in the public interest; and other modifications to the consent decrees would not be appropriate at this time (e.g., modified to allow PRO members to “partially withdraw” rights and thereby prevent the PROs from granting licenses that include those rights to certain users (in particular, digital music services) but not to other music users).  Further,  the DOJ stated that assuming ASCAP and BMI proceed in good faith, the Division will forbear for one year from any enforcement action based on any purported fractional licensing by ASCAP or BMI.  Also, the DOJ identified certain guidelines and practices that may be useful as the industry moves towards such a shared understanding on fullwork licensing.  Lastly, the DOJ concluded that the consent decrees remain vital to an industry that has grown up in reliance on them.  But the consent decrees are inherently limited in scope, and a more comprehensive legislative solution may be possible and preferable.

ASCAP Settles DOJ Action Concerning Exclusive Licensing Agreements

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USA v. ASCAP, No. 41-1395 (S.D.N.Y. May 12, 2016) (Doc. 749).

The Dep't of Justice and ASCAP have settled a claim concerning approximately 150 ASCAP agreements that granted the performing rights organization exclusive licensing rights allegedly in violation of an earlier consent decree.  The settlement prohibits ASCAP form entering into any agreement under which a songwriter, composer, or music publisher grants ASCAP the exclusive right to license the right of public performance in musical works, and further limits the licensing activities of board members and music publishers.  Further, ASCAP agreed to pay $1.75 million.

Proposal To Make Illegal Streaming A Felony

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Statement of David Bitkower, Acting Deputy Assistant Attorney General, Criminal Division, U.S. Dep't of Justice, before the Committee on the Judiciary, Subcommittee on Courts, Intellectual Property, and the Internet, U.S. House of Representatives, for a hearing entitled "Copyright Remedies," presented on July 24, 2014.  [Link].

In a congressional hearing, a Department of Justice officer states that the Department supports a felony penalty for illegal streaming of music.  (See statement, p. 7).  Currently, there are felony penalties for illegal distribution and reproduction (downloads), but only misdemeanor penalties for illegal public performance (streaming).

Dep't of Justice on Constitutionality of Copyright Statutory Damages

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The U.S. Department of Justice's memorandum in defense of the constitutionality of the statutory damages provision of the Copyright Act, 17 U.S.C. § 504(c). Submitted to the U.S. District Court for the District of Minnesota in the peer-to-peer file sharing case against defendant Jammie Thomas.

Capitol v Thomas - DOJ Memo in Support of Statutory Damages